UK’s Arbuthnot Banking Group Reports Profit Drop in 2025 Earnings

Arbuthnot Banking Group, the London-listed specialist lender serving private and commercial clients, unveiled its full-year 2025 results on March 26, showing a resilient yet pressured performance. Pre-tax profit tumbled 31% to £24.2 million from £35.1 million in 2024, hammered by declining interest rates, compressed margins, and softer lending volumes. Despite the downturn, the group highlighted robust growth in customer deposits and assets under management.

PROFIT SLIDE AMID RATE PRESSURE

During 2025 the Bank of England cut its base rate four times, by 25 basis points each, to 3.75%. Operating income dipped to £169.5 million from £179.5 million, with the average net margin squeezing to 4.7% from 5.1%. Net income for the year ended December 31, 2025, came in at £17.81 million, down sharply from £24.85 million the prior year. Basic and diluted earnings per share both landed at 109.1p, a retreat from 152.3p.

The group itself flagged its high surplus liquidity, deposited at the Bank of England, as a key sensitivity to falling rates. The private and commercial bank maintains high levels of surplus liquidity, deposited at the Bank of England. As a result, any reduction in revenue from these reserves will impact its profits. The group said it had performed resiliently in an uncertain, low-growth environment.

DEPOSITS AND ASSETS SURGE

Bright spots emerged in balance sheet growth. Customer deposits expanded 11% to £4.57 billion. Funds under management and administration rose 21%, driven by very strong inflows that represented 22% of FUMA at the start of the year.

FUMA ended the year at £2.7 billion.

Alongside the core bank, the group's lending businesses include Renaissance Asset Finance, asset-based lender ACABL and commercial vehicle leasing business AAG; customer loans fell 6% to £2.25bn. Impairment losses fell to £2.5 million from £6.3 million. In the core bank, the average loan-to-value ratio was 49.5% (2024: 48.9%).

STRATEGIC OUTLOOK AND MARKET CONTEXT

After four Bank of England rate cuts in 2025, the group said it had continued to allocate capital to the lending proposals offering the best returns on capital rather than using lending volumes as a measure of success.

Arbuthnot Banking Group is the holding company for Arbuthnot Latham & Co. Total assets rose to £5.0bn (2024: £4.7bn) and the CET1 ratio was 13.3% (2024: 13.2%), with a total capital ratio of 15.4%. Substantial surplus liquidity stood at £1.42 billion above the regulatory minimum.

The final dividend declared increased by 2p to 31p, with a total dividend for the year of 53p (2024: 69p including a 20p special), the ordinary dividend up 4p. Looking ahead, management said the outlook had become more uncertain given events in the Middle East, but the group still sees good client growth opportunities.

Chairman and Chief Executive Sir Henry Angest said the group remained conservatively managed with a robust balance sheet.